When you have a hard job in a profession like banking, it’s easy to get enthralled with things like fintech. Things that sound fancy but have very little real meaning.

After all, what is fintech? Aside from the combination of two words. It’s like combining plastics and finance to get plasfin. How exciting would that be?

The trouble is that when we combine anything with tech these days, we feel all warm and fuzzy. So we have: AdTech, FinTech, EdTech, RegTech, InsurTech….The list goes on.

But, here’s what fintech really is. – It’s about using technology to solve a problem that exists in finance. It’s about how you are going to build a product or a service, that you can sell to customers in the finance industry. And then it’s about selling the product or service and trying to make some money from it. Trying to make some money. If you’re lucky.

Now, it’s easy to get bored with building spreadsheets and pitch books and to start thinking that some how the magical world of fintech will be filled with millions of dollars that magically come in through a celestial door.

But this is nowhere close to reality. If you want to work in fintech – or to set up your own fintech firm – you are going to have to find a problem in the finance industry you want to solve. Do you want to build a better portfolio management tool? Maybe a better presentation builder? Or an AI engine that can crunch spreadsheets? If that sounds cool and you have edge, than go for it. But don’t jump in before you know what problem you are solving and why.

Secondly you have to care about building a product. Building products takes time. You have to go speak to customers, get programmers to help you, test the product and make sure it does what your client wants you to do. Where in the finance food chain will your product fit? Is it a customer acquisition tool? Or a data analytics platform. Most importantly will clients buy it? How do you know?

Lastly, once you have built the product, you’ll have to get it in front of clients. Even great products don’t sell themselves. This is where most fintechs fail. They solve an important problem using a great product, but they just can’t sell it. It’s so much easier to get a meeting when you are calling from even a 3rd Tier bank then when you are calling from a fintech firm that started a year ago.

So, back to my emails. I usually get them about 18-24 months into a fintech’s life when the professionals are getting tired of living of their savings, no cash is coming in, and potential customers aren’t taking their calls.

That’s when people realize how much they miss those PowerPoint decks. I’m not saying that you won’t succeed in fintech, I am saying that the journey will be long. Good luck if you decide to embark.

The author is a former Goldman Sachs managing director and blogger at the site What I Learned on Wall Street (WilowWallStreet.com). What I Learnt on Wall Street is an education focused business founded a group of Wall Street veterans from the best firms determined to help the next generation. They just launched: Smart Cuts to the Top, a live course delivered on Jan 24th.

Comments (5)

I think the problem here is bankers trying to get into fintech, when techies are taking over banking.

Just look at what the guys over at linkedin “Neville Facey”, Panama are doing, they are returning 1% per day even in yesterdays volatility. They are making money while others are going through a blood bath in the markets.

Came across your post from LinkedIn and thought it timely, as I just appeared on the Waters Technology podcast talking about this topic, though from my perspective as a tech vendor veteran jumping in to capital markets fintech (about 6 years in).

Anyway, I talk about some of the challenges, etc., but one topic we talked about probably is quite relevant here – how it’s critical to partner with someone who has been on the vendor side before. I’d be curious how many of the ex-bankers in fintech you hear from have a co-founder that’s steeped in product development, sales, etc., from the vendor perspective.